State approves power purchase agreement between Cape Wind, NStar

Under the terms of the agreement, NStar will purchase 27.5 percent of the power produced by Cape Wind at a rate of 18.7 cents per kilowatt hour.

ARIEL WITTENBERG

The state Department of Public Utilities approved a 15-year power purchase agreement Monday between the NStar power company and the offshore wind farm developer Cape Wind.

Under the terms of the agreement, NStar will purchase 27.5 percent of the power produced by Cape Wind at a rate of 18.7 cents per kilowatt hour. The agreement will last for 15 years and allows for price adjustments as needed.

NStar and Cape Wind submitted the agreement for state approval in February.

"It is clear that the Cape Wind facility offers significant benefits that are not currently available from other renewables," the statement said. "This contract supports the largest renewable energy project proposed in New England while providing protections to consumers against the volatility of fossil fuel prices."

Cape Wind has also entered into a similar agreement, already approved by DPU, which will allow National Grid to purchase 50 percent of the power.

Representatives from Cape Wind did not respond to requests for comment.

NStar spokesman Michael Durand said all NStar customers "will benefit from our Cape Wind agreement and we are pleased that the DPU has approved it."

"Our commitment to purchase a portion of Cape Wind's power will help the project move forward and, when combined with our on-shore wind contracts, clearly demonstrates our dedication to addressing climate change issues," he said.

Under the agreement, residential customers of NStar will see their electricity bills increase by 1.3 to 1.4 percent. DPU estimated that the bill of a typical NStar residential customer using 500 kilowatt hours of electricity per month will increase by roughly $1. Commercial and industrial customers will see their bills increase by 1 percent to 2.1 percent.

Durand attributed the increase to the novelty of renewable energy, saying that it currently costs more than traditional energy to produce.

"The goal of entering into these types of power purchase agreements is that the more you promote these projects, the less expensive renewable energy becomes," he said. "The goal would be that in the future those prices will become more competitive to fossil fuels."

NStar's agreement with Cape Wind includes a safeguard for customers to ensure that, should constructing the 130-turbine wind farm cost more than budgeted, Cape Wind will absorb the losses. In the event that constructing the farm costs less than anticipated, the price of electricity will be reduced in such a way that ratepayers will receive 60 percent of the benefit, with NStar receiving 40 percent.

"This makes sure that the developer cannot reap all the profit without benefit to customers," DPU spokesman Krista Selmi said.